While the Israeli government welcomed a ceasefire proposal from Egypt and France, it attached conditions. It said there must be a complete end to rocket attacks against Israel and an arms embargo must be imposed on Hamas.

Hamas, in turn, demanded the Gaza's border crossings be reopened.

Israel is said to be considering the third phase of its operation, which will see its troops moving into more populated areas to target Hamas militants.

Earlier, UN officials said that at least 40 people, including children, have been killed in an Israeli strike on a United Nations-run school in Gaza. The attack in the north of the region is the single most deadly incident since Israel began its offensive 11 days ago.

The UN has confirmed that 55 others injured when Israeli tanks shelled the area near the school.

Palestinian medics say the building was being used as a shelter for Palestinians fleeing the fighting.

According to Palestinian sources, 688 have been killed and more than 3,000 wounded in Gaza since Israel began its offensive 11 days ago. At least 195 children have been killed.

The Israeli military say it has killed around 130 Palestinian militants since their ground invasion began three days ago, but local doctors say many of the casualties are civilians.

Israel has confirmed the loss of 8 soldiers so far, with four allegedly killed accidentally by their own side.

Israeli attacks unite enemies

While diplomatic moves have been gathering momentumin Gaza, the atmosphere is the West bank is very different. Here there is no shooting, no tanks, no violence.

But Hamas member Razi Ashur says that his thoughts are never far from the events unfolding in Gaza.

Ashur says he’s ready to join his brothers in Gaza at any moment and just waiting for the order.

“Yes, there was fighting before between Hamas and Fatah, but today we are all one against our enemy Israel,” he said. “Sometimes you find two brothers fighting each other, but still, by the end of the day, they are brothers.”

One year ago the streets of the city were on fire – but not because of the Israelis. ‘The brothers’ from Hamas and Fatah were killing each other for control of Gaza. It ended with a Hamas victory – and thousands of Fatah supporters fled to the West Bank for refuge.

Today, however, Jericho’s Fatah leaders say they’ve returned to Gaza to fight the Israelis.

“It is very bad what is happening in Gaza. We wanted to make peace with Israel but now we don’t want to,” Fatah supporter Hassan Abdullah said.“If the situation continues, I am ready to go fight with hamas against Israel. I think Israel wants to make problems between Hamas and Fatah.”

Many in the West Bank believe there are deals being made behind the scenes between Mahmoud Abbas, leader of the Palestinian Autonomy, and the Israelis. But Fatah members are too afraid to express their opinion on camera. Not so with Israeli peace activist Uri Avneri.

“Not only Mahmoud Abbas but President Mubarak of Egypt and several other Arab states are almost openly collaborating with the Israeli attack, hoping to gain some advantage for themselves,” he said. “I think they are playing a very dangerous game for themselves because the fury accumulating among the masses of Palestinians, including Arab citizens of Israel and the Arab masses throughout the Arab world, is intense.”

Still, Israelis are not worried about violence in the West Bank – at least for now. They’re afraid of a second front erupting along their northern border with Lebanon.

In the last few days the Lebanese army and the United Nations increased patrols to prevent missiles being fired into Israel by Hezbollah fighters.